Argument

The Pandemic Could Be the Crisis Liberalism Needed

The future has rarely seemed bleaker for free-market democracy—but small changes can bring it roaring back.

French Finance Minister Emmanuel Macron gestures during a session at the World Economic Forum (WEF) annual meeting in Davos, on Jan 22, 2016.
French Finance Minister Emmanuel Macron gestures during a session at the World Economic Forum (WEF) annual meeting in Davos, on Jan 22, 2016. FABRICE COFFRINI/AFP via Getty Images

The world may be reaching a dangerous inflection point for liberalism. According to the latest reports from Freedom House, over the last 15 years the share of unfree countries in the world has risen while the share of free countries has dropped. Today, government deficits are spiking in response to the public’s demand for intervention to mitigate the economic impact of the coronavirus pandemic, and some warn that authoritarian leaders are seizing the opportunity to expand their control.

Still, this may be a time when liberalism starts to gain ground, not lose it. A new study by World Bank economists, drawing on data from 190 economies spanning the last 15 years, finds that fiscal crises—of the sort created by the pandemic in countries around the world—are likely to spur liberal reforms, particularly in the economic policy areas of property, investment, and trade.

How liberal advocates act on this glimmer of hope will be crucial. Post-Cold War efforts to spread liberal democracy have disappointed to date. Instead of ushering in the end of history, as Francis Fukuyama predicted in 1989, a know-it-all approach to proselytizing liberal institutions to other countries has engendered widespread resentment toward Western influences. And yet, it’s more complicated. The political scientists Ivan Krastev and Stephen Holmes recently argued that we should think of that resentment not as a rejection of liberalism, per se, but as an indignant reaction to its perceived imposition.

What’s the lesson here? Liberals must stop thinking of liberalism as theirs alone to give. Instead, they should recognize it as a universal ideal that has roots in many different traditions and cultures. It is on such foundations that enduring liberal institutions can be built in diverse places.

Extensive research on institutional change bears that out. There is a saying: “People support what they help create.” For liberal institutions to “stick” in new places, they must not be mere knockoffs of institutions that grew elsewhere. The West’s own liberal democratic institutions, including the division of powers, property rights, freedom of exchange, free speech, and public deliberation, are idiosyncratic versions of liberal ideals, but not the ideals themselves. They are successful, but they’re works in progress. They are worthy of thoughtful study, but they’re not suited for franchise-like plug and play.

This should prompt a tectonic shift in the foreign aid approach to development. A growing number of voices within development circles have been trying to do just that. They advocate a “localization” agenda, which means shrinking the role and influence of foreign governments and nongovernmental organizations and narrowing their focus to a few areas where they are better suited to help, such as information-sharing and providing operating support for local NGOs to increase their capacity to lead change for themselves.

With widespread belt-tightening across the development sector due to the coronavirus pandemic, including at major institutions such as Oxfam and the U.K. Department for International Development, such a radical change has become thinkable, perhaps even imminent, in a way we would not have imagined a year ago. This may provide a short window to permanently curb the undue influence of outsiders on local development questions.

That’s not to suggest a pure agnosticism about what to support abroad. Liberal reforms and liberal institutions should remain the priority. The same logic that commends federalism and its principles of subsidiarity applies equally to development work in other countries: Decentralization works. But if foreigners continue to hold the reins, even unwittingly, their efforts will continue to breed resentment and, more importantly, fail to serve local needs.

For maximum effect, we should look to private philanthropy for most grant-making to foreign NGOs. Voluntary nongovernmental philanthropy is less liable to special-interest distortions and political manipulation. Just as importantly, private philanthropy can be less rigid about predetermined compliance requirements.

Such flexibility is important. Through the grant-making our organization has administered to think tanks and other NGOs in recent years, we have learned to hold our tongues and listen. We invite our grantees to tell us what’s possible, what’s important, how they will do it, and, most importantly, how they will measure meaningfully their success for the projects they are proposing.

That model fits best with what we know about the diffusion of good ideas and practices. In their study on “Regulatory Reforms after Covid-19,” Simeon Djankov and other World Bank economists also found that countries that share borders or that trade heavily with each other are more likely to adopt for themselves the reforms of their neighbors and commercial partners. They see with their own eyes the successes and failures in neighboring countries and can, on their own initiative, decide for themselves what changes to pursue and how best to pursue them.

Decentralized liberalism is a prudent strategy for navigating this time of great uncertainty. In 2020, we have seen the limits of centralized models at work. From the Centers for Disease Control and Prevention to the Internal Revenue Service to the Food and Drug Administration in the United States and, at the global level, the United Nations’ World Health Organization, big institutions have failed. It’s a stark reminder that there are very real limits to the types of problems that distant authorities are able to solve, no matter how well-funded or well-trained they are.

Early in this crisis, the Microsoft billionaire Bill Gates invested billions of dollars in seven different vaccine candidates simultaneously knowing that, at best, one or two might work. Gates knows what a big mistake it can be to place all your bets on one unproven solution. Not only does it raise the stakes considerably if you get it wrong, but it also severely limits any opportunities for learning, since there are no alternative results for comparison.

Liberal economies, with their presumption of decentralized decision-making, allow fast-acting, widespread, uncoordinated experimentation and learning. That model takes advantage of centralized knowledge and expertise, to be sure, but it also integrates the dispersed knowledge the rest of us possess about our individual circumstances. People close to the problems can find solutions that actually work, long before a large and distant bureaucracy ever could.

Our instinct when facing fear and uncertainty is to shift the tough decisions to the experts and to insist on one uniform—and presumably “best”—solution to our diverse problems. Experts play important roles in collating and disseminating knowledge, but they cannot know enough to successfully conjure up one great solution for us all. It’s the lesson we have learned in our failed attempt to install liberal democracies throughout the world. In this moment of crisis, we now have a second chance to get it right. Let’s keep making history. 

Matt Warner is the president of Atlas Network, a grant-making organization focused on locally led change. He is the editor of Poverty & Freedom: Case Studies on Global Economic Development.

Tom G. Palmer is the vice president of international programs at Atlas Network, a grant-making organization focused on locally led change.

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